MICROCAPITAL BRIEF: New Microfinance Regulation in Botswana to Provoke Industry Decline and Business Closures

The creation of the Non-Bank Financial Institution Regulatory Authority (NBFIRA) in Botswana, was recently announced by MicroCapital, reportedly has disappointed microlenders in the country. As it is intended to protect borrowers, the law is expected to limit collections of late payments by microlenders. NBFIRA announced that microlenders would no longer be allowed to access and confiscate a borrower’s bankcard or national identity card in the instance of non-payment.

For many microlenders, this announcement is synonymous with future business losses and closures. Without the possibility of collecting payment from a borrower in default, many microlenders reportedly have shut down their businesses, which has spurred job losses and reduced opportunities for borrowers who do not qualify for traditional bank loans.

Ndiye Elias, the manager of an unnamed cash loan company in Francistown, Botswana, was quoted as having said, “There is a high possibility of permanently closing this month as we are only collecting our payment from our clients and stopped lending until we know the future of our business [1].”

By Amira Berrada, Research Associate

Sources and Additional Resources:

[1] The Botswana Gazette: “Micro Lenders Foresee Industry Collapse,” http://www.gazettebw.com/index.php?option=com_content&view=article&id=12

MicroCapital.org story, April 12, 2012, “MICROCAPITAL BRIEF: Botswana Approves Microfinance Regulations, Sets Licensing Requirements, Prohibits Taking Personal Documents” https://www.microcapital.org/microcapital-brief-botswana-approves-microfi

MicroCapital.org story, October 7, 2011, “MICROCAPITAL BRIEF: Government Botswana to Stop Facilitating Repayment of Microfinance Loans by Civil Servants” https://www.microcapital.org/microcapital-brief-government-of-botswana-to

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Amira joined MicroCapital while working at Export Development Canada (EDC) as a Credit Insurance Underwriter. Amira holds a Bachelor degree in International Business and Finance from Concordia University in Montreal. While completing her bachelor degree, Amira spent a semester in France and upon graduation, three months in India working with non-governmental agencies, political and spiritual groups for various socioeconomic initiatives such as the advancement of women. While travelling to different cities and rural areas in India, Amira was touched by the poverty she witnessed and was dedicated to finding a way to intertwine her business interests with her passion for development. She hopes this internship in microfinance will provide the framework to integrate an element of development into her professional career as well as positively contribute to the field of microfinance. Amira speaks English, French, and Spanish fluently and has conversational knowledge in Portuguese and Arabic. In her spare time, she enjoys reading, trying new restaurants such as molecular gastronomy, restaurants made out of ice and Nicaraguan meals wrapped in banana leaves. Most of all, she loves to travel with loved ones.